Sword Catchers Unite

I cant help but notice all the calls for what is essentially a slow motion crash. Posters here are predicting a move that hugs the flaring bollinger bands into the abyss. And so I must offer a much more common resolution of this move and how the last crash was more uncommon than most here seem to think.

The last two days of choppy sideways action is flaring the top bollinger band down as circled. RSI is diverging on smaller time frames, RSI 14 has turned up above the 30 line. Finally, sthochastics are finally giving a bullish indication. I agree however that these indicators can all reverse with bad action tomorrow. Another bullish close will severely threaten the bear case. Their final stand will be at the middle Line (should we get there).




Now go analyze the October Crash and notice that any divergences one might have imagined, well they disapeared the following day. Here, we have clear divergences, plenty of fear, and some positive price action in the commodities sector. I am not calling for a huge multi month rally. I am saying, probably, we are looking at a multi week rally into the top of the bollinger band as it descends and contracts.

. . .

I am not calling for a huge multi month rally. I am saying, probably, we are looking at a multi week rally into the top of the bollinger band as it descends and contracts.

That's a reasonable and well-made argument. And here's a shocker - I'm not going to talk my own book in this reply.

I might try and post a thread later, but here are 3 facts making me a nervous I.T. bear:

1) Tuesday saw a monster Down $TICK (that I hadn't noticed until today). The previous two I.T. rallies (July & Nov. '08) began a day or two after a -1500 TICK.

2) RUT closed right back in its range. It closed exactly at its Nov. low today (see last nights thread). This indicates the low could have been successfully tested on a weekly.

3) Three sectors I'm short - Nasdaq (NDX), Oils (XOI/XLE), & Emerging Markets (EEM via EEV) - all are lacking in Quality of Volume as they attempt to break their Nov. lows. While they haven't tested their lows yet - if volume keeps contracting on any future pullbacks they'll spring anyway

Oversold in a bear market is not necessary a buy.....By the way, the bearish P&F chart projection is 62.
Link to chart.

Oversold in a bear market is not necessary a buy.....By the way, the bearish P&F chart projection is 62.
Link to chart.

As a long time student of P&F charts, I arrive at a different downside count objective...taking a vertical count of the o's off the Jan High (12 X 3=36 subtracted from the Jan High of 94=58).

Taking a similar count of the Feb Highs yields an objective of 51.

Oversold in a bear market is not necessary a buy.....By the way, the bearish P&F chart projection is 62.
Link to chart.

As a long time student of P&F charts, I arrive at a different downside count objective...taking a vertical count of the o's off the Jan High (12 X 3=36 subtracted from the Jan High of 94=58).

Taking a similar count of the Feb Highs yields an objective of 51.

If you use the 5 point reversal, the new objective is 49.67. (close enough to your objective)?

Oversold in a bear market is not necessary a buy.....By the way, the bearish P&F chart projection is 62.
Link to chart.

I'm sure your intent was not to be flippant but its hard not to take it any other way.

. . .

I am not calling for a huge multi month rally. I am saying, probably, we are looking at a multi week rally into the top of the bollinger band as it descends and contracts.

That's a reasonable and well-made argument. And here's a shocker - I'm not going to talk my own book in this reply.

I might try and post a thread later, but here are 3 facts making me a nervous I.T. bear:

1) Tuesday saw a monster Down $TICK (that I hadn't noticed until today). The previous two I.T. rallies (July & Nov. '08) began a day or two after a -1500 TICK.

2) RUT closed right back in its range. It closed exactly at its Nov. low today (see last nights thread). This indicates the low could have been successfully tested on a weekly.

3) Three sectors I'm short - Nasdaq (NDX), Oils (XOI/XLE), & Emerging Markets (EEM via EEV) - all are lacking in Quality of Volume as they attempt to break their Nov. lows. While they haven't tested their lows yet - if volume keeps contracting on any future pullbacks they'll spring anyway

2) RUT closed right back in its range. It closed exactly at its Nov. low today (see last nights thread). This indicates the low could have been successfully tested on a weekly.

FWIW, the NYA closed today 3.1% below its' November intraday low, the OEX closed 6.6% below its' November intraday low and the Wilshire 5000 closed 2.1% below its; Nov intraday low.

Oversold in a bear market is not necessary a buy.....By the way, the bearish P&F chart projection is 62.
Link to chart.

I'm sure your intent was not to be flippant but its hard not to take it any other way.

I got killed by using the oscillators at the last bull market in the 80's.....I was going to buy but was waiting for the oscillators to come back to the oversold level.....Yep, you know what happened.....I don't want you to trade just on the oscillators alone....Sorry if you feel that I am _____.

nm

Edited by CHAx, 04 March 2009 - 10:23 PM.

Today's market action will likely invalidate this setup... Trade safe guys.